MoU just a ‘comfort document’, Govt to AG

The Odisha government has coined a new term for what was so far known as memorandum of understanding (MoU): ‘comfort document’.

After tom-tomming the signing of well over a 100 MoUs in the last one decade as proof of its commitment to industrialisation, the government has suddenly discovered that “An MoU is not a necessary legal and statutory requirement for setting up of project or taking any steps towards that end.”

The discovery is part of the government’s reply to the Accountant General of Odisha, which had questioned the validity of land acquisition after expiry of MoU, despatched on Monday.

“Signing of MOU is done on the request of investors and reiterates the sanctioned conditions of State Level Single Window Clearance Authority (SLWCA)/ High Level Clearance Authority (HLCA) and the existing laws. It does not confer any new rights or privileges and is a mere comfort document for the investors which at times is sought by financial institutions as a proof of approval of project by state government as all conditions are found in one document. Lack of MoU would not hamper the implementation of the project in any way,” the letter said.

“The MoU is tool for investment promotion which accords a degree of comfort to promoters to initiate project development, without over-ruling the provisions of other statutory framework applicable to an industrial project such as land acquisition and law material projects,” the government said in response to the draft CAG report.

Maintaining that the continuance of land acquisition even after the lapse of the MoU as ‘strictly legal’, the letter said; “Continuance of land acquisition proceedings even after expiry of validity of MoU is strictly legal, more so when the existence of an MoU is not a necessary legal and statutory requirement for setting up of project or taking any steps towards that end,” said the government.

“Procurement of land is being made either through the operation of Land Acquisition Act or the Odisha Government Land Settlement Act, which are independent of MoU. Once the process starts under the due process of law it moves as per the act concerned and does not wait for extension of MoU. Thus lapse of MoU does not stand as a bar on the path of land acquisition,” said the government.

The facilitation support and commitment made in MoUs is universally available to all projects approved in the state, even to those projects where in MoUs are not signed.